KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
Maintain a neutral call with an unchanged target price (TP) of RM1.21
Perdana announced that its subsidiary Perdana Nautika Sdn Bhd (PNSB) has been awarded a c.RM 67.0m contract from Petronas Carigali Sdn Bhd (PCSB). The contract is for the supply of a floating accommodation vessel for a period of 3 years, with an optional extension of 2 years commencing 17 September 2016. We are pleased with this award as it reaffirms the Group’s plans to attain a better fleet utilization rate for 2HFY16 which will improve its current rate of 53% as at 2QFY16. We continue to recommend Perdana with a Neutral call with a unchanged TP of RM1.21, based on our DCF approach using a 10.9% WACC. Our estimates have accounted for sufficient contract replenishments albeit considering a lower utilisation rate assumption coupled with a less aggressive expansion plan going forward. Perdana remains suspended in the interim while awaiting the final takeover structure.
PCSB award did not come as a surprise as Dayang, Perdana’s new management has been aggresively bidding for jobs, with the intention to continue boosting the Group’s activities. We are reaffirmed of Dayang’s ability to secure new work for the Group going forward.
The Group’s average utilization for FY16 is expected at c.68%, buoyed by current and potential contracts of both long and short-term durations. We understand there are plans to deploy 3 to 5 vessels to Brunei and Indonesia, while leveraging on its umbrella contracts and closed competitive bidding process to Petronas license holders. We understand that the Group is also exploring possibilities of venturing into regional markets in the ensuing year.
Management plans to leverage on Perdana’s average 6-years fleet for Dayang’s activities in the areas of hook-up & commissioning (HUC) and topside structural maintenance (TSM) mainly in the brownfield segment which have been less adversely affected by the dampened oil price landscape. Of 17 vessels, 7 vessels are currently chartered to Dayang for its operations.
Source: PublicInvest Research, 05 October 2016
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